Komanoff: The Time Has Never Been More Right for a Carbon Tax (U.S. News)
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Komanoff asks: If efficiency hasn’t cut energy use, then what? (Grist)
Komanoff: Senate Bill Death = Win for Climate (The Nation)
Q&A: Charles Komanoff (Mother Jones)
Note: This post distills and extends ideas from our Nov. 1 post, The Carbon-Tax Nimby Cure.
From the East Coast to Idaho’s high desert, big green-energy investments are foundering.
Just in the past week, Danish wind giant Orsted scuttled the 2,248-megawatt Ocean Wind farm it was developing off New Jersey’s Atlantic coast, while NuScale scrapped its planned 462-MW complex of six 77-MW small modular reactors (SMRs) near Idaho Falls.
Both ventures were viewed as door-openers to new forms of large-scale U.S. carbon-free green power. They would have contributed mightily to decarbonizing their respective grids, taking the place of fossil fuel electricity now spewing nearly 4 million metric tons of carbon dioxide each year.
Their demise, along with dimming prospects for Equinor’s 2,076-MW Empire Wind farm off Long Island, NY, suggest that the vaunted crossover point at which big green-energy investments will come seamlessly to fruition fast and hard enough to rapidly decarbonize our grids is receding.
The causes are no mystery: supply bottlenecks, spiraling materials costs, 40-year-high interest rates, Nimby obstruction. Not all of these will necessarily persist, but suddenly the combination looks daunting. Big energy projects, once derided as “brittle” by energy guru Amory Lovins, are rife with negative synergies. Nimbys stretch project schedules and impose punishing interest costs, particularly on big wind farms, a phenomenon we wrote about a week ago in The Carbon-Tax Nimby Cure.
Alas, Joe Biden’s Inflation Reduction Act is not a panacea. IRA incentives primarily lift EV’s, rooftop solar, heat pumps, batteries and factories. By themselves they’re not going to refloat stalled clean power projects. The big push will have to come from somewhere else.
What a Robust Carbon Price Could Do for Green Energy
A robust carbon price could do the trick. Not a token price like RGGI’s $15, which is the per-metric-ton (“tonne”) of CO2 value of the 4Q 2023 permit price in the northeast US Regional Greenhouse Gas Initiative electricity generation cap-and-trade program; but $50 or more per tonne of carbon dioxide, preferably $100.
I’ve been calculating how much profit a robust carbon price could inject into clean-energy bottom lines. The numbers are so astounding that I checked and rechecked them. Here’s one: A $100/tonne carbon price in NY would allow Empire Wind to charge an additional $200 million or more each year for its output. How? Because the tax would raise the “bid price” for natural gas-generated electricity, the dominant power source and thus the price-setter on the downstate grid by so much — $30 to $35 per MWh, I estimate — that Empire Wind’s 7.25 million MWh’s a year could extract an additional $240 million in its power purchase agreement with the NY grid operator.
Same goes for NuScale. I estimate that its Idaho SMRs could command an additional $100 million a year (less than for Empire Wind because the project is smaller and not all of its output will replace fossil fuels). This additional value equates to $29 per MWh — nearly the same, coincidentally, as the $31/MWh climb in costs since 2021 that triggered NuScale’s cancellation, according to a report by the anti-nuclear Institute for Energy Economics and Financial Analysis.
These added payments to clean-energy developers are not “subsidies.” They arise by slashing ongoing subsidies now enjoyed by fossil fuel providers and processors — in this case the methane-gas extractors and the electricity generators that burn the fuel — by subjecting these fuels to carbon pricing. The added payments will come about as the carbon price forces the gas generators to raise their sale price to the grid (to recoup their higher price to purchase the gas), which then creates room for Empire (or NuScale) to raise its prices.
Every cent of the carbon tax revenues will remain fully available for public purposes, whether to support low-income ratepayers, or invest in more clean energy or community remediation, or, our preference at CTC, as “dividend” checks to households. None of it needs to be earmarked to Empire or NuScale for them or other clean-power generators to rebuild their profit margins. The gainsharing comes about through pricing carbon emissions, not disbursing the carbon revenues.
The Not In My Back Yard crowd wasn’t an apparent factor in NuScale’s downfall. (“Regulatory creep” was, but that’s a story for another time, not to mention one I dissected 40 years ago for the peer-reviewed journal Nuclear Safety.) But they certainly were for Ocean Wind in NJ and will be in NY if Empire Wind goes down the drain.
But here’s the thing: Not only would the added revenue allowed by the carbon price help return Empire Wind to the black. It would give Equinor, the developer, the wherewithal to spread so much largesse among the residents of Long Beach, LI (my hometown!) that they could subdue the Nimbys who have been able to hold up permitting by spreading scare stories about the routing of the project’s power cables underground. Nimby-ism solved, not by suasion (a fool’s errand) but by motivating the masses in the middle who evidently require more tangible inducements than saving the climate (or their beaches or homes).
Let’s Think Big
Ocean Wind, Empire Wind and NuScale are just a few examples of carbon-free projects that could again pencil out with robust carbon pricing. The question remains, how do we get there?
The point of this new analysis isn’t so much to tie clean energy to carbon pricing, but to enlist the political power and prestige of clean-energy entrepreneurs and developers on the side of carbon-tax advocacy.
As we noted in our previous (Nov. 1) post, during headier carbon-pricing times (2007 to 2011) the Carbon Tax Center attempted, alongside allies like Friends of the Earth, the Friends Committee on National Legislation, and Citizens Climate Lobby, to induce the American Wind Energy Association, the Solar Energy Industry Association and other green-tech trade groups to join us in advocating carbon taxing. We put out similar feelers to the Nuclear Energy Institute and the American Nuclear Energy Council. Getting the U.S. nuke lobby behind carbon taxing should have been a no-brainer, given that carbon taxes that monetized the climate value of nuclear power plants’ combustion-free electricity could have supplied mega-dollars to keep extant reactors solvent.
No dice. We weren’t granted even one conversation with the nuclear folks. The wind and solar people, for their part, insisted that unending cost reductions through increased scale and efficiency, along with green power’s inherent magical appeal, would propel them past any obstacle. Why besmirch our Randian aura with energy taxes, they seemed to say, when our tech is going to usher in energy abundance and spare earth’s climate?
Things look different now. Big, carbon-free power ventures — the ones that everyone from governors and ambassadors to scientists and schoolkids are counting on to get us off fossil fuels — are beset by troubles: financial, logistical, cultural.
Without genuine carbon pricing that accords clean energy the economic rewards to which it’s entitled, too many large-scale green energy projects are going to come up short. As we asked in that earlier post: Will clean-power developers look at this week’s NJ and Idaho losses, among others, and decide that they need a carbon tax every bit as much as the climate does?
Extinction Rebellion takes on heliports in Manhattan during a week of climate action.
This post, written by renowned eco-journalist Christopher Ketcham and commissioned by and published in Truthdig on Sept. 15, describes an action I helped organize and participated in, two days earlier. We repost it here, with permission, because it highlights a rare climate protest that targets fossil fuel “demand” rather than supply. And not just ordinary fuel usage but an egregiously selfish and exclusive one: helicopter travel.
“Helicopters are a pestilence to New Yorkers and a rotten pinnacle of an economic system that places decadent pleasure over planetary survival,” I declaimed in the XR press release. True externality pricing would shut down the vast majority of helicopter transportation. Absent, or alongside that, last week’s direct action was an attention-getting way of connecting the climate crisis to luxury emissions.
— Charles Komanoff, Sept. 20, 2023.
* * * * * * * *
The Extinction Rebellionists mustered south of the heliport on the west side of Manhattan at around 2 p.m., just as the sun emerged following a flurry of rain. It was hot when the crowd of 40 people moved as one to stop the howling machines based at Blade Lounge West, a commercial heliport on 30th Street along the Hudson River Greenway. The outsized carbon footprint of those who used the heliport was “obscene,” said the organizers. The afternoon’s goal was to make as much trouble for its operations as possible.
One of the organizers of the action, a 75-year-old energy economist named Charles Komanoff, was prepared to be arrested. He told me he had been feeling unsteady that morning, jittery and fearful, as he handed me his rain slicker and water bottle and backpack to hold.
Months earlier, he had explained his reasons for wanting to shut down helicopter traffic in his native city. “New Yorkers hate helicopters,” Komanoff wrote in an email to Extinction Rebellionists:
Tourist helicopters, Hamptons helicopters…. They hate the noise, the fumes… the arrogance, the power to pollute, the power to act as lords. I hate them too, for those reasons, plus this: helicopters epitomize luxury carbon. They are the essence of the consumption that must disappear *now* if we aim to protect Earth and preserve climate.
Now, Komanoff and his fellow Rebellionists picketed at the vehicle entry to the Blade Lounge West, which is owned and operated by Blade Air Mobility, Inc. They unfurled a banner that said LIFE OR DEATH, and waved XR flags that whipped in the wind, and one pushed a stroller with three baby dolls in it, with a note that read, “Will we have enough food to eat? Can crops survive the heat?” They chanted Helicopters, private planes, your emissions are insane. (They are also profitable: Blade Air Mobility’s $61 million in revenue in 2023 was up 71% on the year.)
Komanoff and I had written an editorial together in 2022 about the absolute need to kill luxury emissions as the stuff of gluttony and entitlement. “‘Keep it in the ground’ protesters confine their blockades to energy supply infrastructure and studiously ignore the demand half of the equation,” we wrote. “This has been a shortcoming of the climate movement for too long, as it passes up one opportunity after another to rouse millions against the class that, even more than the corporations of Big Carbon, perpetuates the climate crisis: the world’s wealthy.”
The protest unfolded in the genteel way of these things. There were cyclists and joggers on the greenway, and tourists walking, and in the glint of the sun off the rippling water, many passersby stopped and asked what was happening. Two elderly women wanted to participate. One of the women, 72-year-old Mireille Haboucha, an Egyptian, told the protesters, “We agree with your action. This is what we all need to do.” The friend with whom she was strolling, Barbara Schroder, 75, told me, “We had never thought about luxury emissions, but it makes sense to stop it.”
I asked a 29-year-old lawyer named Dominique why she was there. It was her first climate action, and she asked that her last name not be used. “I’m morally obligated,” she told me. In that feeling of obligation there was great anger. “There are 30 million people in Pakistan homeless because of floods that happened there a year ago. Thirty million that are homeless because people like the assholes we are seeing today need to take helicopters.”
Dominique was reminded of Hannah Arendt’s observation, in “Eichmann in Jerusalem,” a book about the Nuremberg Trials, that complacency seemed to be the main evil which allowed the Holocaust to happen — the world, and especially Germans, just not caring enough to stop the Nazis. “Part of the moral obligation for me is that we are on the brink of, are already in, mass climate genocide,” she told me. “I do not want to be the modern-day equivalent of a complacent 1930s German.”
The night before, at an XR body blockade training event in Brooklyn, a 56-year-old retired schoolteacher told me that, on her farm in Wallkill, in the Hudson Valley, the entire oat crop had failed. First there was drought, in April, then flooding in June. That was one of many reasons she was at the heliport. She’d been arrested seven times since 2019 for similar actions.
The helicopter traffic did not cease, although the protesters succeeded in blockading the entrance to the parking lot. The CEO of Blade Air Mobility, Rob Wiesenthal, a dapper little man who makes $11.9 million a year, seemed shocked that his poor heliport had been targeted. The executive stood and watched the protesters with a look of despair on his face. A chopper came blasting in, touching down with a monstrous flatus sound and carrying with it the stink of jet fuel. Then another and another arrived, their disgorged passengers forced to cut through the crowd of flag wavers and shouters of chants to waiting mammoth SUV taxis that were blocking road traffic because they couldn’t enter the parking lot. (Climate action should involve stopping the SUVs, too, I thought to myself.)
I screamed a question to Wiesenthal over the racket. He smiled and said he had nothing to say to the media on the record. His employees were enraged. One of them got in a scuffle with a press photographer on hand for the event, trying to grab his camera, cursing and threatening him. A scowling heliport attendant named Anthony Smith told me, “I called my boys from uptown and they’re gonna take care of this real quick. You’ll see.”
The skies cleared fully, and the sun blazed down, and the protesters knitted their sweaty brows in the heat. Still they picketed and chanted and sang and hurled slogans. A National Guard helicopter, enormous and looking like a black metal buzzard, swooped in, bathing us in poisonous fumes. “Those your boys?” I asked Smith. “Oh yeah,” he said. But the black chopper touched the tarmac for less than a minute, then powered up again and was gone in a fury of rotor wash and noise. More helicopters came, Hueys from JFK Airport ($225 one way) and Newark International ($245) and the Hamptons ($1,025).
After an hour and a half, 40 or so officers from the New York Police Department’s Strategic Response Group arrived bristling with zip ties. Warnings were issued to cease blocking the way, and some of the protesters — the green and yellow teams, as they were called — stepped aside. The red team, which included Komanoff, a 75-year-old woman named Alice, a 60-year-old woman named Heidi, a third woman, Shoshana, and two young men — stood firm, for their intent was to be arrested in symbolic revolt. The cops turned them around, zip-tied their wrists and off they went in a cramped police van. The protesters dispersed. Wiesenthal breathed relief. His faithful employees bumped fists.
What was accomplished? Morale-boosting, the fostering of solidarity and sense of unity of purpose; the building of a community, ready for more action. When the six arrestees were released from the 7th Precinct, they were smiling and proud, and a group of fellow protesters was waiting for them at a nearby restaurant and filled the place with wild applause as they entered. My thought was this crowd needs to gather on a daily basis at West 30th Street. Pain should be felt over and over at Blade Lounge West until its operations become untenable, until Mr. Wiesenthal’s despair is permanent. It’s either that, or what some in the movement say is the next needed step: monkeywrench the choppers and destroy them on the tarmac.
Sunday’s March to End Fossil Fuels in midtown Manhattan was big, loud and vibrant. The organizers put the tally at 75,000. While that may have been over-generous, the march was far and away the largest U.S. climate assemblage in some time.
It was also an occasion to ponder the goals and tactics of the climate movement.
The customary signs and chants denouncing Big Oil and its funder banks were out in force. What felt new, and unsettling, was the vitriol directed at President Biden. Last year’s passage of the Inflation Reduction Act, with its promise to hasten the transition from fossil fuels by accelerating wind and solar and electrification, might as well have been an hallucination.
Ganging Up On Joe
The signs and chants castigating the president flowed like a river. Biden: Declare a climate emergency … Cancel Willow … I didn’t vote for fires and floods.
Yikes. Whatever happened to the Inflation Reduction Act’s nearly half-a-trillion dollars worth of tax credits and other subsidies paying down the cost of renewable electricity from solar and wind farms while also cutting consumer costs to purchase electric vehicles, electric heat pumps, and home and commercial electric battery storage?
The intent of the IRA’s myriad and synergistic incentives isn’t just to grow the U.S. green manufacturing base with good-paying green jobs. It’s to displace fossil-fuel use by retiring petrol-fueled engines and furnaces and simultaneously “greening the grid” by speeding the rate at which wind and solar power usurp electricity generation from coal and methane gas.
As the IRA was snaking through Congress last August, energy analysts were scoping the potential carbon and methane reductions from those displacements, along with estimates of increased emissions from new federal oil and gas leasing that Biden committed to expedite to win the tie-breaking Yes vote from West Virginia Senator Joe Manchin. One leading think tank, Energy Innovation, concluded that “The bill’s clean energy measures will yield 24 times more emissions reductions than its fossil fuel provisions will increase emissions.” (The firm subsequently raised its 24-to-1 emissions ratio to 28-to-1.)
Seven months later, Biden held up his end of the deal, issuing a permit okaying ConocoPhillips’ $6 billion Willow oil-and-gas drilling venture on Alaska’s North Slope — and threw away the climate good will due him from the IRA. Never mind that the additional carbon emissions from the Biden-Willow “hydrocarbon bomb” will only negate a fraction of the emission reductions from his legislation’s clean electricity and end-use electrification, as I pointed out back in March. Even more poignantly, those additional emissions are more properly estimated to be close to zero. Why? Because what actually burns the carbon fuels and puts the CO2 into the atmosphere is fossil fuel consumption, not supply. If Biden had rejected Willow, the same supply would have been called forth from Nigeria, or Kuwait or some other oil region or state to fill U.S. cars, planes and trucks.
In other words, Willow or any new U.S. drilling activity is nearly irrelevant from a climate standpoint because, as we wrote then, “demand finds a way to create supply,” rather than the reverse.
As we marched, I asked a smattering of anti-Biden sign-holders if the president merited praise for the green energy unleashed by his IRA, rather than criticism for okaying Willow or the other contentious project, the Mountain Valley Pipeline through West Virginia. The typical response was No, we’re in a climate emergency. Any new fossil-fuel infrastructure is too much.
To be sure, trade-offs are hard to wrestle with even in calm moments, much less among a big crowd on the move. But the blank stares about the IRA and occasional flashes of venom against Biden were disquieting, nonetheless. The Times‘ headline for its print report on the march was all too accurate: “Fingers Pointed at President, Protesters Demand End to Fossil Fuels.” Left unsaid is whether protesting Biden climate bombs will seed electoral bombs in 2024, placing our democracy as well as climate in irredeemable peril.
Who’s Really Funding Fossil Fuels?
If the anti-Biden sentiment was novel, the anti-big banks rhetoric was old hat. Blaming the climate crisis on Big Oil and demanding that universities, pension funds and the like “divest” by dumping fossil fuel securities from their holdings, has been a staple of climate organizing for nearly a dozen years, as I decried a year-and-a-half ago, in Exxon doesn’t care if you divest. Neither does climate:
When the writer and climate activist Bill McKibben kicked off the [divestment] campaign in a July 2012 Rolling Stone article, Global Warming’s Terrifying New Math, the rationale was three-fold: (1) dry up capital and make it harder for the fossil fuel industry to create new mines, wells, pipelines and terminals; (2) weaken the industry’s social and political standing so it couldn’t easily block pro-climate policy; and (3) by hanging a “Dump Me” sign around Big Oil, amp up climate organizing. Not for nothing did McKibben subtitle his Rolling Stone article, “Make clear who the real enemy is.” It was Exxon and its brethren.
That path has proven to be a dead-end, I concluded in my post. One piece of evidence was a simple graph showing that Exxon-Mobil’s share price had outperformed the stock market as a whole since the onset of the Covid pandemic. More evidence, if any were needed, was available in the wonderfully wonky signboard at left that was borne by one of yesterday’s marchers, a vibrant senior citizen affiliated with the McKibben-inspired Third Act.
The amounts that the four banks — Chase, Citi, Bank of America, and Wells Fargo — have funneled into fossil fuels since the start of 2016 sum to an impressive-seeming $1.27 trillion ($1,270,000,000,000). Yet over the same period, consumption of petroleum products by U.S. families and businesses earned the oil companies a revenue haul nearly three-and-a-half times as great: an estimated $4.29 trillion ($4,290,000,000,000).
[I calculated that figure from the average 19.9 million barrels per day of gasoline, diesel fuel, jet fuel and other petroleum products kerosene and so forth consumed per day over the same seven years, 2016-2022. (See Energy Information Administration, Monthly Energy Review, Table 3.5 Petroleum Products Supplied by Type.) Factoring in (1) there are 42 gallons of petrol per barrel, (2) the seven years total 2,555 days (365 x 7), and 3) an average retail price per gallon sold of $2.00 — a conservative markdown from the actual $2.82 average retail price of gasoline over that period — yields $4.29 trillion.]
Who’s really funding fossil fuels? American households, businesses and institutions, locked into grotesque consumption levels that U.S. climate activists studiously ignore.
To be sure, my dollar comparison has apples-and-oranges elements. Only some of the $4 trillion or more in petrol sales is available for investment in exploration and other petroleum infrastructure. And other banks beyond the Big Four also fund oil investment. On the other hand, U.S. consumption of methane gas and coal fossil fuels now exceeds consumption of petroleum on a Btu basis by 20 percent, suggesting that total fossil fuel revenues over the past six years was probably in the vicinity of $8 billion rather than the $4.3 billion from petroleum products alone.
My point is that bank financing is a much weaker linchpin for creating new fossil fuel infrastructure than most climate activists suppose. What really makes fossil supply possible is the lock-in of consumption of fossil fuels themselves, in billions of routine purchases that, day in and day out, fork over many more dollars to the fossil fuel industry than do the banks.
Or, as Darrell Owens, an analyst with CA YIMBY (Yes In My Back Yard), the pro-housing group that has spearheaded the recent revolution of expansionary zoning in California, put it recently on Twitter, “Oil drilling [and such] isn’t for fun, it’s in service of carbon intensive demand that can be stopped.” Stopped how? By undoing automobile dependence, incentivizing smaller vehicles, densifying suburbia, introducing congestion and road pricing, and of course, federal-level carbon taxing, as I detailed last year for The Nation magazine (The Climate Movement In Its Own Way).
Uprooting the Source: Carbon Consumption
Happily, some at Sunday’s march saw past Biden and the banks and critiqued the structures of consumption that enforce dependence on fossil fuels, whether directly at the gas pump or the furnace or stove, or indirectly in purchases of products whose manufacture and transportation entail massive quantities of fuel, or in inefficient or indulgent use of electricity, most of which is still made by burning coal or methane gas.
These included stalwarts from Citizens Climate Lobby, including an enthusiastic contingent from Pittsburgh as well as folks from across the Northeast; and individuals whose handcrafted signs called out U.S. car culture not only for its gasoline profligacy but for its stifling of human life and health.
“Tax Pollution, Pay People” packs so much into four words, I said to the sign-holder, a CCL member from Pittsburgh, who told me his name, which I failed to write down. When I told him mine, he nearly jumped out of his shoes and shouted it to his fellow CCL’ers as if I was Greta Thunberg and Steelers legend Franco Harris rolled into one.
I started to apologize for CTC’s relative quiescence over the past year or two and to explain that I’ve been consumed with helping get NYC’s congestion pricing plan across the goal line. He stopped me short, thanking me for CTC’s work and insisting that, together, we’ll win a nationwide price on carbon before it’s too late.
So there’s my take. Singling out Biden for attack felt excessive and worrisome, since any falloff in enthusiasm will crimp the chances of small-d democratic, climate-aware outcomes in the elections next year. Similarly, more than a decade’s worth of targeting Big Oil and the banks doesn’t appear to have moved the needle for effective climate policy. Going after “luxury carbon,” as Extinction Rebellion did in a small but resonant climate action last week that I helped organize, feels to me like a more empowering path, one that might capture both the populist moment and climate urgency in a single stroke.
But notwithstanding the mis-directions, it was uplifting to be amidst tens of thousands with a like mind: A better world is possible. A better world is necessary. I want a fossil-free president. Amen to that!
The New York Times yesterday published my op-ed, There’s Only One Way to Fix New York’s Traffic Gridlock, co-written with Columbia University climate economist Gernot Wagner.
Our essay is a meticulous and extensive (1,300 words) brief for making drivers feel the pocketbook costs of their vehicles’ traffic-jam causation, via the policy measure known as congestion pricing. In our telling, not only is this policy guaranteed to generate immense benefits for New Yorkers; as the title suggests, we declare it to be the only way to “free … drivers from the traffic snarls that pollute the air and crush the soul.”
The essay was nearly a month in the making and the product of extensive argument-shaping and fact-checking by the Times’ op-ed staff, bespeaking the paper’s commitment to presenting congestion pricing in a positive light. Its appearance broke the mold of the paper’s hesitant past coverage in two important respects:
1. It explicitly rests on the “comprehensive spreadsheet model” of New York traffic and transit I began developing in 2007 (coincidentally, the year I launched the Carbon Tax Center).
2. It let Gernot and me voice the inconvenient assertion that the regional transit agency charged with designing and administering congestion pricing — the Metropolitan Transportation Authority — “through a few fateful, faulty assumptions, underestimated drivers’ propensity to switch trips from cars to other transit options.” These flubs have tied congestion pricing advocates in knots, forcing us to rebut objections of environmental justice impacts that don’t stand careful scrutiny, although they understandably resonate with communities that historically have borne hugely disproportionate damages from highways, energy facilities and other polluting infrastructure.
It’s only a modest stretch to view the Times’ twin breaks with tradition as the Grey Lady’s version of Andrew Cuomo’s bombshell announcement in August 2017 that “congestion pricing is an idea whose time has come” — itself a rupture that set in motion passage of the state statute authorizing congestion pricing in March 2019.
They suggest that the Times may be lying in wait for the right political winds to let advocates of carbon pricing make a parallel case with respect to climate. Not that a carbon tax is “the only way to fix America’s carbon crisis” but, rather, that it’s a complementary policy tool to last year’s Inflation Reduction Act, and an essential one to ensure that green energy actually replaces rather than merely supplements use of fossil fuels.
For the benefit of non-subscribers blocked by the Times’ paywall, and also to enable comments as well as add a few graphics, we present Gernot’s and my op-ed in full.
— C.K., June 9, 2023
The plan to charge drivers to enter Manhattan south of 60th Street, which last month moved closer to federal approval, will deliver two notable gifts to New York and the region when it begins, perhaps as soon as next April.
The first is that congestion pricing will cut traffic not just within the so-called charging zone but on the hundreds of streets and highways that cars use to go to and from that zone. This reduction of almost two million miles traveled in the region each day will free many drivers from the traffic snarls that pollute the air and crush the soul.
Using a detailed benefit-cost analysis that assumes a pricing structure of $15 at peak times, $10 as traffic begins to thicken and $5 at off-peak times, we calculate that the value of those projected time savings to drivers and truckers amounts to nearly $3 billion a year, with time saved in the boroughs and counties surrounding Manhattan exceeding those on the island.
These estimates are based on a comprehensive spreadsheet model of the region’s traffic, developed by one of us (Mr. Komanoff). State officials used that model to write the statute authorizing congestion pricing, which the New York State Legislature passed in 2019.
The other gift will be the $1 billion a year in congestion pricing revenue that the Metropolitan Transportation Authority will use to secure $15 billion in bonds to pay for improvements to mass transit in the city. Those upgrades will reduce waiting times and onboard delays — and the precious time subway passengers lose as a result.
Either outcome would be a godsend. The combination has the potential to be transformational for New Yorkers.
Why, then, do many people seem anxious about, if not downright opposed to, congestion pricing? Entitlement plays a part: Why should we suddenly be forced to pay for something that had been free? Another reason surely is disbelief. Many people don’t believe that the revenues — the $1 billion a year from drivers — will actually improve mass transit services. The M.T.A. is a money pit, people say.
They may have a point. But the subway, bus and commuter rail services that the M.T.A. operates are also a marvel and a necessity. After the pandemic lockdowns, the system still delivers 2.5 times as many people a day into the Manhattan core as cars and trucks do, though that is down from four times as many before Covid struck. Still, the M.T.A. must build and manage far more effectively. The same political will that got congestion pricing written into law must be marshaled to eliminate layers of consultants, to bring work rules into the 21st century and to make design-build contracting, in which the project designer and the contractor work together under one contract from the beginning, the rule.
People are also unconvinced that congestion pricing will, in fact, cut congestion. Urban gridlock has come to appear immutable in the United States, perhaps nowhere more so than in the Manhattan core, where travel speeds were averaging a maddening 7 miles per hour before the pandemic. Why should congestion pricing succeed where a century of other remedies — like widening roads to only then narrow them again — has failed?
This question is even more salient after the M.T.A.’s environmental study of congestion pricing, released last summer, which concluded that Manhattan traffic will diminish only because trips that now pass through the city’s center would divert around the island, possibly adding traffic and air pollution to parts of the Bronx, Staten Island, Nassau County on Long Island and Bergen County in New Jersey.
We believe that the M.T.A., through a few fateful, faulty assumptions, underestimated drivers’ propensity to switch trips from cars to other transit options. We don’t say this idly — our estimation is based on decades of studying traffic in and around Manhattan and on basic economic principles.
How much traffic will diminish will depend on the toll design selected by the civic leaders who make up the city-state Traffic Mobility Review Board. They’ll be aiming for the same sweet spot that London, Stockholm and Singapore have attained through their successful congestion pricing programs: 15 to 20 percent fewer car trips into the zone, a cut big enough to reduce the many negatives traffic brings and enough to reap the targeted $1 billion a year in revenues to improve the subways, buses and commuter rail systems. (New Jersey Transit rail and bus and PATH would not share in these revenues.)
The congestion charges have not been set. But the M.T.A.’s model and ours agree that if exemptions are kept to a minimum, it could be as little as $15 for a rush-hour trip into Midtown and $5 to $10 during off-peak hours for E-ZPass holders. (In London, drivers pay 15 pounds during the day, or nearly $19.)
The benefits of congestion pricing — faster, less stressful travel above and below ground and safer, healthier streets and communities — don’t negate the distress of drivers who understandably don’t want to pay where they now drive free, but they assuredly eclipse it.
In addition to the nearly $3 billion worth of saved time for drivers, we estimate that the myriad other benefits add up to an additional $2.5 billion. Those benefits include fewer crashes, better health from cleaner air and more walking and biking, and time saved for transit riders, thanks to improvements enabled by the congestion pricing revenue. Subtracting the $1 billion drivers will pay to enter the congestion zone, the result will be over $4 billion in annual net benefits, or almost $12 million each day.
Moreover, only a small slice of area residents habitually drive into the Manhattan core. Very few are among the working poor, as the Community Service Society of New York, one of the nation’s oldest antipoverty organizations, found when it endorsed congestion pricing in 2019 and again last year. Many drivers, too, may come to feel less of a sting from paying the toll once they actually experience the less-snarled roads.
Last month, the Federal Highway Administration tentatively approved an M.T.A. report that identified how to alleviate possible harm to disadvantaged communities. Now the public has until Monday to review it.
To opponents of the plan, we say:
The M.T.A. is responding to public concerns. To hasten federal approval, the agency has committed to toll discounts for frequent low-income drivers into the zone and also to encourage pollution reductions such as electrifying diesel-powered refrigeration trucks at the Hunts Point Market in the South Bronx and expanding New York City’s clean trucks voucher program to help pay to electrify diesel trucks elsewhere. These commitments followed public feedback on earlier versions of the plan.
Every car is causing congestion. Stalled highways and jammed streets aren’t just the fault of Uber or U.P.S. or bike lanes or public plazas. Everyone driving to or in New York’s central business district (except in the wee hours) adds to congestion. We estimate that right now, a single round trip by car from Sheepshead Bay in Brooklyn to Radio City Music Hall in Midtown during most of the day causes $100 to $200 worth of additional delay for everyone else. That makes a prospective $15 or even a $20 peak congestion toll a downright bargain in comparison.
Congestion pricing is the only durable antidote to persistent traffic congestion. The Columbia University economist and Nobel laureate William Vickrey demonstrated 60 years ago that there’s no way out of gridlock without making drivers pay for taking up limited street space. Otherwise, there will always be more car owners wanting to use the available space than there is space to accommodate them.
Drivers all over the city and well beyond stand to gain from this plan. Yes, it will be painful to pay for something that has been free. But it is even more painful to spend hours idling in traffic, knowing that a better path beckons.
The New York City public affairs site Gotham Gazette today published my essay, For Long-Term MTA Funding, Look to a State Carbon Tax. I’ve cross-posted it here to allow comments and to bring it directly to the Carbon Tax Center’s readership.
— C.K., May 4, 2023
That huge sigh of relief from New York City mass transit advocates last weekend was for the state budget handshake to tack more than a billion additional dollars a year onto a key MTA funding stream, the Payroll Mobility Tax. According to both my calculations and an announcement from Gov. Kathy Hochul, the agreed-to 75% rise in the tax rate on employee salaries paid by businesses in the five boroughs will add $1.1 billion to the PMT’s ongoing annual $1.8 billion take.
(The numbers prorate imperfectly because the rise in the tax rate, to 60/100 of one percent, applies only in the city; the rate in the seven suburban MTA counties remains 34/100 of one percent.)
The upward bump in the PMT is part of the package to avert a fare hike and service cuts that would have jolted the entire metro region. Raising the same $1.1 billion via the subway farebox, for example, would have required a whopping 35% jump in fares, a calamity that would have triggered enough new car, cab, and Uber trips to slow vehicles in Manhattan by 5% and boosted city and regional carbon emissions by nearly 400,000 tons of CO2 a year — enough to negate the climate benefit of 90 new large wind turbines, according to my modeling. And these figures don’t include lost jobs and commerce from worsened transportation. Reducing service to save the same amount would have produced similar bad outcomes.
Score a big win, then, for transit and New York. But the new revenue comes with a downside: taxes on payrolls discourage hiring and compound our area’s anti-business aura. Moreover, this revenue infusion will almost certainly be not the last but the first in a series the MTA will require throughout the decade to limit future fare hikes and improve service even as ridership continues to lag pre-pandemic volumes. Counting on raising the PMT next time, and the time after that, will be a fool’s errand. There has to be a better way.
I believe there is: enact a modest statewide carbon tax and dedicate a third to a half of the revenue to shoring up public transportation budgets around the state, though principally in New York City.
Reappraising Carbon Taxes
On January 1, Washington state launched its carbon-pricing program, the nation’s second all-sectors carbon charge, with a starting price around $20 per ton of CO2, though most of the emission allowances fetched even higher prices in the first carbon auction, in March. I estimate that the same $20 price applied to all fossil fuels burned in New York State could generate revenues of $3 billion a year (see table).
Dedicating a third of those proceeds to the MTA would add a billion dollars to the authority’s annual revenue. Other slices of the revenue could cure deficits at smaller transit systems around the state.
Even with these allocations, roughly half of the new $3 billion in annual carbon revenues would remain available for a range of purposes from home weatherization to rebates offsetting higher fuel costs for lower-income rural New Yorkers.
Of course, no new tax is ever welcomed with open arms. In recent years, moreover, carbon taxing has lost political standing with left and right alike. Right-wingers, in thrall to fossil fuels, denigrate the very idea of climate concern. Opinions on carbon pricing on the left, while far more nuanced, tend toward an “eat your peas” quality, seeing the promised revenues but not the powerful tides unleashed by the increased fuel prices.
Could a state carbon tax have a chance in New York this time around? I believe so, if only because MTA deficits are untenable and a statewide carbon tax looks like the least-bad long-term antidote.
- New York wouldn’t be the first state to price all carbon emissions. California has done so for a decade, and, as noted, Washington just followed suit.
- Two-thirds of the $3 billion in carbon tax revenue could go to other, non-MTA uses across the state.
- Nearly half of the revenues would come from charges on fossil (natural) gas, the very fuel that climate activists are targeting in order to electrify heating and cooking while also shrinking climate-damaging methane leaks from pipelines, wells, and buildings.
- Carbon taxing’s regressive bias (it takes more dollars from the rich but more proportionally from the poor) would be blunted by its helping keep a lid on transit fares.
- The affluent suburban counties that will be on the hook for the carbon tax caught a big break by their exemption from the increase in the Payroll Mobility Tax. Moreover, some pro-climate suburbanites might even support a climate-helping carbon tax.
- Upstate households will be cushioned from the tax by the region’s preponderance of low-carbon electricity from nuclear, hydro, and wind power.
- Aid to transit could be packaged as an urban corrective to suburban- and rural-facing Inflation Reduction Act federal subsidies for solar panels, electric vehicles, and heat pumps. (Notably, the IRA does not fund urban-friendly mass transit and e-bikes.)
- Left-leaning climate-justice advocates who shy away from carbon pricing might warm to a policy that cuts emissions by attracting car trips to buses, trains, and subways.
This panoply of advantages points to diverse potential sources of support for a transit-benefitting state carbon tax:
- NYC transit and “livable streets” advocates;
- Economic-justice advocates who recognize affordable transit’s value in combating poverty;
- Climate campaigners who see carbon pricing as a complement to other carbon-cutting policies;
- Suburbanites concerned that future hikes in the Payroll Mobility Tax will come for them;
- “Electrify-everything” proponents working to eliminate fossil gas from residences and other buildings;
- Developers of low-carbon electricity — not just solar and wind providers but proponents of retaining the state’s four upstate reactors and building new ones;
- Energy-efficiency engineers, contractors, and workforces;
- Labor unions whose members fabricate, erect, and maintain the spectrum of green energy projects that a carbon tax will help make more abundant by making fossil sources costlier.
Electricity producers in New York already pay a carbon fee under the multi-state Regional Greenhouse Gas Initiative (RGGI) cap-and-trade program. In addition, Governor Hochul and the statewide climate coalition New York Renews have advanced competing carbon pricing concepts, both of them, somewhat confusingly, dubbed cap-and-invest. Hence, an MTA-focused carbon tax, which would employ a carbon-based charge on fossil fuels extracted or imported into New York State rather than a carbon cap enforced through sales of emission permits, wouldn’t arrive on a blank slate.
RGGI currently charges electricity producers around $14 for each ton of CO2 their generators emit. This levy is generating $365 million of statewide revenues a year, paid as surcharges on power bills, which goes to support investments in energy-efficiency and renewable electricity. While in theory the RGGI charge could be netted against the new carbon tax, the relative ease and importance of decarbonizing electricity production make it preferable to retain it and add the carbon price on top.
Cap-and-invest presents a trickier set of issues, partly because neither the governor’s prospective program included in the new budget nor NY Renews’ more elaborate plan has been fully fleshed out. In addition, the latter is the fruit of years of deliberation and consensus-building among the coalition’s hundreds of participant grassroots groups, who now constitute a formidable host.
At this writing, NY Renews envisions applying $10 billion in carbon revenues over several years in no less than 73 individual spending buckets grouped in four uber-categories: Climate Jobs and Infrastructure includes elements like aiding electric bus manufacture ($100 million) and offshore wind power supply chains ($300 million). Energy Affordability earmarks $1 billion to wipe out utility customer debt and $2 billion to support building electrification. Community & Worker Transition Assistance devotes $600 million to the “just transition” from jobs in carbon fuels to positions in renewable energy. And Community Directed Climate Solutions sets aside $2 billion to unspecified projects in historically underserved and overburdened urban neighborhoods and rural areas.
The NY Renews plan should be seen, then, as a holistic roadmap to make over not just how energy is supplied in the state but how it is consumed and governed. Billion-dollar-a-year allocations to the MTA aren’t the kind of investment its members have envisioned. Nevertheless, exploratory calculations suggest that the carbon payoff from service improvements paid for by a state carbon tax would be impressive.
As an illustration, I have calculated that an average 20% speed-up in subway trips achieved by running more trains at higher speeds would save straphangers and drivers each around 100 million hours a year (the latter from car trips switching to trains) while reducing car and truck emissions by 900,000 tons a year. Even more CO2 would be eliminated because of New York City’s improved competitive advantages vis-a-vis less “inherently green” suburbs and exurbs.
To be sure, so striking a gain in subway performance would almost certainly carry a price tag well over a billion dollars a year. Still, the prospective benefits underscore both the carbon-cutting potential of infusing new funds into subway service and the need to score competing claims for their climate value.
Broader Considerations and Next Steps
Over time, the carbon tax’s revenue base will shrink as its price incentives kick in and other carbon-cutting policies also gather steam. The resulting loss in tax revenues could be counteracted by periodically raising the per-ton tax rate. New York City could supplement the tax through revenue-generating street-management measures such as curbside pricing and other forms of road pricing.
Earlier this year, Community Services Society CEO (and MTA board member) David R. Jones and Riders Alliance executive director Betsy Plum proposed expanding New York City’s Fair Fares program to allow an additional 772,000 lower-income New Yorkers to qualify for half-fare transit passes. The cost, which they put at $142 million a year, should be a candidate for the carbon spending package.
This discussion has centered on the carbon tax’s creation of a new funding pot to maintain and improve transit affordability and performance. But taxing carbon emissions stands to benefit society in two other major ways. It will diminish financial incentives propping up carbon fuels and also support societal paradigms promoting care over harm.
A carbon tax is more than just a pay-for, in other words. Simply making it more expensive to buy and burn carbon fuels discourages fossil fuel use in a multiplicity of ways. Moreover, the very act of pricing carbon emissions can spur “externality taxing” in other realms, from congestion pricing to taxing the sugar content of soft drinks. Making New York the third U.S. state with broad-based carbon pricing will also add momentum to long-sought federal carbon emissions pricing.
Shoring up MTA finances, while reason enough to enact a state carbon tax, isn’t the lone consideration. The crisis of transit funding should be seen as a catalyst to pricing fossil fuels more closely to their true societal costs — a vital goal in its own right.
The next MTA funding crisis-as-opportunity will be upon us soon. The Legislature should move swiftly to study the benefits of taxing carbon emissions as a way to hold the line — and more — on transit fares and service, well in time for next winter’s budget negotiations. Transit and climate advocates and their counterparts in the Hochul administration should consider integrating a transit-focused carbon tax into their agendas.
Taking $3 billion a year for any public purpose, no matter how noble, is no small matter. The time to start selling a transit-supporting state carbon tax is now.
The Intercept today published Christopher Ketcham’s and my essay, The Shutdown of “Luxury Emissions” Should Be at the Center of Climate Revolt. I’ve cross-posted it here to allow comments by Carbon Tax Center subscribers and readers. Let us know what you think.
— C.K., December 13, 2022
Climate disorder won’t be remedied through an orderly march of green energy. The world must also rein in consumption.
By Christopher Ketcham & Charles Komanoff ▪ Photos and captions are copied from The Intercept.
SEVEN HUNDRED SELF-DESCRIBED “climate rebels” breached the chain-link fence surrounding Amsterdam’s Schiphol Airport, the world’s third-busiest hub for international passenger traffic, on November 5. With bolt cutters they opened holes in the fence and poured in, some of them on bicycles, and raced across the tarmac. Others laid ladders against the 9-foot-high fence and topped it on foot.
They had to move quickly before military police, tasked with securing the airport, saw what was happening. The rebels targeted 13 private jets parked or preparing for takeoff, at least two belonging to NetJets, the Berkshire Hathaway subsidiary that bills itself as the world’s largest jet company and sells fractional ownership shares in private business jets.
They swarmed each of the jets in groups of 20 or 30 or more and sat down before the looming machines, there to stay for the next six-and-a-half hours, unmoving, until at last police waded in and started hauling the rebels to jail. Some of the 413 arrests were violent. “There was fear and rage, for the state of the world and for my own future,” said one of those arrested.
Another 800 people gathered for a march and sit-in at the airport’s main plaza, and at least 30 activists blocked the road that serves as the supply route to Schiphol. Every single private jet at Schiphol ended up grounded that day, not merely the 13 that were surrounded.
“The superrich have got used to polluting as they please with a total disregard for people and planet, and private jets are the pinnacle of these luxury emissions that we simply cannot afford,” Jonathan Leggett, one of the activists, told us. “Our action brought them back to earth. We wanted to show the extremeness and injustice related to this manner of transport.”
In other words: a perfectly tailored climate action. Not a highway sit-down ensnaring hapless motorists and keeping cars running, and emitting, longer. Not sit-ins at banks that broker investments in fossil fuels but don’t directly cause their combustion. And certainly not spattering soup on museum art, with its unsettling aura of sullying humanity’s heritage in order to save it.
No, the Schiphol action went for climate change’s jugular: self-indulgent carbon-spewing. It did so balletically, in the democratic and fuel-efficient motion of humans racing on foot or whirling about on bicycles. And ecologically: In the words of one participant, “We made sure that any planes could still land, because the last thing we wanted was for them to be unnecessarily flying for any longer than they already were.”
It was an action that bared the gluttony and entitlement of fossil fuel usage. “Keep it in the ground” protesters confine their blockades to energy supply infrastructure and studiously ignore the demand half of the equation. This has been a shortcoming of the climate movement for too long, as it passes up one opportunity after another to rouse millions against the class that, even more than the corporations of Big Carbon, perpetuates the climate crisis: the world’s wealthy.
Limits of Green Energy
Climate disorder won’t be remedied through an orderly march of green energy. Replacing fossil fuels with a planetary buildout of wind turbines and solar panels, while simultaneously making and plugging in a billion new electric furnaces and vehicles, looks straightforward in a spreadsheet. In truth, though, ramping up green energy alone won’t cut fossil fuel use quickly enough to meet the Paris warming limit of 1.5 degrees Celsius. Supplanting the world’s combustion-based energy infrastructure with an all-electric model will be too lumbering, too roundabout, and too full of its own drawbacks to fully bend the emissions curve in the brief time left.
The world must also rein in consumption. For reasons both symbolic and practical, the climate movement must strike not just at pipelines and mines, but also at obscene wealth.
The justification is unarguable. Large personal fortunes feed carbon consumption and make a mockery of programs to curb it. As well, the surplus wealth of the superrich is probably the lone source of capital that can finance the worldwide uptake of greener energy and also pay for adaptation where it’s most critical.
At the nexus of consumption and wealth sits luxury carbon. Which is why the Schiphol action was so strategic.
Consider that the world’s richest 10 percent account for 50 percent of fossil fuel burning and carbon emissions. Consider that climate reparations, for which the Global South won acknowledgment but little more at last month’s COP27 climate talks, can’t be funded at scale by tweaking wealthy countries’ hidebound taxation-as-usual. Consider that carbon emissions pricing, an indispensable policy tool for shrinking fossil fuel demand, can’t be made politically palatable in the U.S. — even with worthy “dividend” schemes — so long as middle- and working-class families must witness the superrich lording and polluting at will.
As the Schiphol rebels surely know, luxury carbon, like all manufactured desire, is a contagion, oozing inexorably from the sanctums of the few to become desires of the many. Few Americans, and even fewer Europeans, flew in airplanes in 1950. These days, half of U.S. residents fly each year, averaging half a dozen flights each, according to the industry’s annual “Air Travelers in America” reports. As commercial aviation grew safer and more affordable, feeding the increase, business and pleasure travel became normalized.
Today, “general” aviation — private jets, business jets, air tourism — is undergoing a similar liftoff as well-heeled flyers seek refuge, and a status boost, from the indignities of commercial service. And nowhere is private jetting’s carbon waste as blatant as it is in Europe, with its extensive rail network. Per passenger, private air travel is five to 14 times more carbon-polluting than commercial flights, and 50 times more than high-speed rail, according to the European NGO Transport & Environment.
In the Netherlands, 8 percent of the population takes 40 percent of flights. Worldwide, the difference is even more stark: One percent of the population is responsible for 50 percent of pollution due to aviation, making air travel a textbook example of how pollution by the rich leads to consequences and injustices for those who have not caused the climate crisis.
Naysayers will note that the tactic of occupying and disrupting airports has been tried before, as in the case of the Plane Stupid campaign of the 2000s and 2010s. Radicals in the climate movement such as Andreas Malm, who advocates property destruction of fossil infrastructure, point out that Plane Stupid was ineffective in bending the arc of emissions.
“What the Schiphol people needed to do is destroy the airplanes on the tarmac and then destroy the airplane manufacturers,” said an ecosaboteur named Stephen McRae, an acquaintance of one of the authors, who recently completed a six-year prison sentence for industrial sabotage. Although he no longer participates in such criminal acts of destruction, he has a point. The planes grounded on November 5 are already back in the air. That doesn’t diminish the value of what the Schiphol rebels did, however. Actions that disrupt carbon comfort without violence or hardship are morale-building, the material from which more actions and eventually mass movements are made.
A few days after the Schiphol revolt, climate activists under the banner of Scientists Rebellion disrupted operations at private airports in four U.S. states and a dozen other countries, according to a New York Times roundup.
While the Times attributed the rising militancy of scientists to “the increasing clarity of the science,” it was more likely propelled by the impulses that motivated protesters in the Netherlands: rage at a future “thrown away for the profits of a few,” in the words of one Schiphol rebel, and the palpable need “to stand there and know we actually were grounding private jets and … actively stopping this manner of pollution,” per another.
Along with their clarity in targeting the true fountainhead of climate disorder — sybaritic carbon profligacy — what stands out most about the Schiphol action is its organizational breadth and cohesion. On top of the 700 occupying the tarmac and the 800 marching and sitting-in at the main plaza were those “working throughout the day, and in the days and weeks beforehand, in a range of supporting roles,” as one organizer reported, describing legal and media teams, an arrestee support team, and a team of caterers. “The diversity of roles worked to our advantage: There are as many ways to engage with activism as there are people, everyone has their own way of contributing.”
Social solidarity on this scale helped buffer the cruelty of airport police who in some cases “ripped people from their groups and held [them] in painful positions even though they were cooperating,” reported one first-time protester who joined the action as a medic. “What started as a nervous morning ended with a fulfilling and accomplishing situation,” he said. “We did this.”